Loyalty Programs

  • Uncategorized


Competition has forced numerous companies across various industriesto start loyalty programs that are aimed at rewarding customers fortheir continued purchase of products or services. Many loyalty orreward programs provide customers with coupons where they can getfree merchandise. Companies use customer information and purchasingtrends to determine the kind of rewards that every customer willreceive. It is essential to note that the more a customer buys aparticular brand, the higher the value of the coupon (Tugend, 2016).The primary goal of reward programs is to enhance the loyalty ofcustomers and collect customer information that can be used tostreamline their needs. The design of a successful customer loyaltyprograms calls for various considerations to be put in place.

Firstly, companies must understand that customers prefer to earnpoints rather than being provided with a chance to win a reward. Inother words, customers will be more likely to accept and commit to aprogram that requires them to earn points and eventually claim aprize (Dowling &amp Uncles, 2015). This is contrary to some rewardprograms where the customer is listed in a draw where the chance ofwinning a prize is low. In these programs, the expected prize isparticularly highly valued, and customers hardly trust such programs.

The second aspect to consider in designing a reward program is thatthe clients prefer fun and unique rewards. For instance, a chance toshop for free for 500 points in 1 minute is a unique reward, and itis a fun activity (Dowling &amp Uncles, 2015). This is the kind ofreward offered by FoBoGro store in Washington. The reward program isexciting, and customers are thrilled every time they win a chance forlimited time free shopping.

Lastly, companies must consider the fact that the clients arereluctant to give out their personal information. Therefore, it isessential to make it worth for the clients to give the information(Tugend, 2016). This can be done through offering valuable rewardsand offering alternatives. For example, reward programs can providethe option of free shopping, a trip for two, or third party giftoffers. This will lure customers towards registering for the rewardprograms.

While concluding, there are various aspects that a company mustconsider while implementing a rewards program. It is important tonote that customers are reluctant to give their personal informationand that they need a reward that is worth their participation.Business enterprises must also be offer rewards that are unique andfun for the customers.


Dowling, G. &amp Uncles, M. (2015). Docustomer loyalty programs really work? Sloan Management Review, 38:71-83.

Tugend, A. (2016). Cultivating Brand Loyalty inEven the Toughest Customer. The NewYork Times. Retrieved from: https://www.nytimes.com/2016/06/06/business/media/cultivating-brand-loyalty-in-even- the-toughest-customer.html?_r=0